2400 years ago, Aristotle came out with his treatise on motion in a series of writings called Physics. This became the basis of what is now known as Aristotelian physics but for the next 1900 years was simply known as physics and defined how the world thought about time, space and motion. This view lasted until the year 1638 when Galileo Galilei released a book titled Two New Sciences. Actually, it took a few years longer than that as Gailileo’s works were banned while he was under house arrest for heresy. One of the foundational components of Aristotle’s view stemmed from an experiment. Aristotle wrote that if one dropped a ball from the mast of a ship at rest, it would fall directly below it where as if one dropped a ball from the same position while the ship was in constant motion, the ball would fall in a different location. Aristotle said that he had not actually conducted the experiment, but that it was so inherently obvious that it should merely be assumed.
Although this seems absurd to us because we now have a better understanding of how the world works, the thought should have been absurd to anyone who had been on a ship in a time period. If one drops a ball from the mast of a ship while moving or completely still, it will fall in the exact same spot. The only thing more ridiculous than Aristotle’s fallacious thought is that it took 2400 years for anyone to say anything to the contrary; for something so influential in how society viewed the world and so easy to test, it is simply mind boggling that a glaring error could remain there for so long.
Its nice to look back upon this historical blunder and laugh at the stupidity and failures of prior generations but we should refrain from being so smug because the type of thinking that existed then, also permeates all throughout our society today.
80% of American engagements involve a diamond ring with an average cost of $3200.
The diamond industry is worth over $30 billion annually. The cost of a diamond has zero correlation with the actual demand of diamonds. Diamonds have absolutely no functional utility to an average person and those that are used for industrial purposes cost close to nothing. Synthetic diamonds can be created of a higher quality and indistinguishable to the human eye from what was found in the ground. Diamonds are also not investments or assets; it is almost impossible to sell used diamonds and if one does, the price will be substantially below what one purchased it for.
Diamond engagement rings are not a historical relic, but a new phenomenon from the 19th century. As a result of an extremely expensive and brilliant advertising campaign, De Beers not only convinced humans that they wanted diamonds, but that they were a necessary ingredient to a successful life. De Beers turned diamonds into a status symbol.
Since the expansion of diamond mining, De Beers has had a near complete monopoly on the entire diamond trade. Normally the price of a good is determined by its supply and demand, however for diamonds, this was not the case. De Beers controlled the supply of diamonds by having complete control over the entire process of everything to do with diamonds; from the ground to the store. When someone else tried to get involved in their industry, they would ensure others boycotted them, followed by selling diamonds replicating their look while eating costs and driving them out of business. De Beers through its position in the market was able to manipulate the price of diamonds across the globe in order to ensure they only sold at exorbitant costs.
Aside from the increased profits, this allowed De Beers to create the perception that diamonds were extremely valuable by only selling them at inflated costs. This, in supplement to the advertising campaign caused people all over the world to desire diamonds, at an arbitrary price just because De Beers wanted it to be this way.
A great example of this can be seen with Tahiti black pearls. Shortly after being discovered, they were put on the American market. As nobody had seen them before, there was no demand and despite being sold for extremely cheap (they had no value and they existed in abundance), nobody would buy them. All that had to be done was to create a fake demand for them. Instead of selling them for what they were actually worth – close to nothing, they were advertised as a rare luxurious item with an extremely high cost. Viola, the exact same product with a new price was all that it took for it to become a hot seller.
Sports are one of the most important components in Western society. One would think in a multi billion-dollar industry, filled with journalists, analysts and couch-ridden experts, that the product on the field would be rational. However, sports are one of the least rational industries filled with glaring errors. Most industries are filled with individuals who are there because they are capable and intelligent where as in sports; most people are there because they used to be good at sports (note: largely a physical skill and not a mental one). To be blunt, sports are filled with jocks and not nerds. From the people working in the offices of sporting organizations or broadcasting the game, most people are there because of their former athletic ability and not their college GPA.
Everyone talks about the analytics and advanced stats revolution in sports today, but the truth of the matter is that 99% of the changes that are being made, or need to be made have anything to do with advanced stats; its just ridding the game of incompetence. Sporting strategy should be studied as a science opposed to strategy being based upon conjecture, feel or instinct.
There are some things such as having a 2nd serve in tennis or bunting in baseball that are so prima facie moronic, that it’s only a matter of time before people catch on. With that said, in America, football reigns supreme and in football, the biggest issue is the use of a kicker on fourth downs. Last week, the New York Times put out a feature on something called the 4th down bot, which was tantamount to a big F-you to NFL coaches and commentators.
On Sunday November 15th 2009, the American media was filled with a football controversy. Patriots coach Bill Belichick went for it on a fourth down. The context was a fourth and 2 on the Pat’s own 28-yard line, with 2:08 seconds left in the game and a 6-point lead. As you can probably guess, the play failed and Peyton Manning ended up getting a game-winning touchdown.
With a sample size of 1, the media raged on how it was a horrible mistake. Op-ed after op-ed, all lambasting Bellichick for his horrible play call. The only issue was that the play call was the correct one. Although it didn’t work out, it was the smarter decision and it wasn’t even close. By the numbers, going for that play would have given the Pats a 60% chance at winning the game while punting it would have given them a 30% chance.
In the New York Times article, the bot analyzes every fourth down play and when a team should go for it, punt the ball or attempt a field goal. It rigorously analyzes the logic behind the moves and backs up every argument with a tome of empirical data. Because the article is so important, I encourage everyone to read it themselves at: http://www.nytimes.com/newsgraphics/2013/11/28/fourth-downs/post.html
What the article does in big bold comic sans letters is draws attention to how irrational football managers are. In almost every instance in fourth down situations, they are wrong. We are not just talking about a little bit wrong, but being significantly wrong on something that has a substantial impact on the final score of the game.
It is not a mystery. In regards to this issue, coaches principally act based on ignorance and loss aversion. There are many academic papers covering the issue of what to do on fourth downs, and most NFL managers likely have no idea about the statistics behind it. The second issue is that most NFL coaches are scared of losing. Ultimately, the goal of every coach is to win, so one would expect him or her to take the actions that help achieve this. However, when the probabilities are obfuscated, coaches try and avoid scenarios that could quickly lead to the other team getting a benefit, even if it is the wiser play call. This is supplemented by job security and concerns about reputation. As the sports media frequently has no idea what they are talking about, coaches do not want to be ridiculed in the morning paper or on ESPN.